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Last Update: 20-Mar-13 09:13 ET
FedEx declines on earnings/guidance results
FedEx (FDX $106.41) reported third quarter earnings of $1.23 per share, excluding non-recurring items, $0.15 worse than the Capital IQ Consensus Estimate of $1.38; revenues rose 4.2% year/year to $11 bln vs the $10.86 bln consensus.
Express: rev +2%, operating income -66%; Ground +11% operating income flat; Freight up slightly, operating income $4 mln vs. ($1) mln last yr.
The company issued downside guidance for Q4, sees EPS of $1.90-2.10, excluding non-recurring items, vs. $2.13 Capital IQ Consensus Estimate.
The compaby issued downside guidance for FY13, lowers EPS to $6.00-6.20 from $6.20-6.60, excluding non-recurring items, vs. $6.31 Capital IQ Consensus Estimate.
The quarter's results reflect the decline in profitability at FedEx Express due to the accelerating demand shift toward lower-yielding international services and lower international export yields. The quarter's results were also negatively impacted by the business realignment costs noted earlier and by fewer operating days in each transportation segment.
"Our lower-than-expected results for the quarter and reduced full-year earnings outlook were driven by third quarter international revenues declining ~$100 million versus our guidance primarily due to accelerating customer preference for lower-yielding international services, lower rate per pound and weight per shipment. We expect these international revenue trends to continue. We have other actions under way beyond those already included in our profit improvement program. Some of these additional actions may involve temporarily or permanently grounding aircraft, which could result in asset impairment or other charges in future periods. In early February, a number of officers and managing directors, primarily at FedEx Services and FedEx Express, accepted voluntary buyouts, and on February 15, thousands more team members were notified of their eligibility for the buyout program. This program is one of the first steps in a process that will help FedEx Express achieve necessary cost structure reductions and improved efficiency. In addition to continued profit improvements in the base businesses at FedEx Ground and FedEx Freight, our profit improvement programs are targeting annual profitability improvement at FedEx Express of $1.6 billion by the end of fiscal 2016, from the fiscal year 2013 base business. Collectively, these initiatives are expected to increase margins, improve cash flows and increase our competitiveness."
The FedEx board of directors has authorized the repurchase of up to 10 million shares of FedEx Corp. common stock. These shares augment the remaining 188 thousand shares authorized for purchase under existing share repurchase programs. It is expected that the additional share authorization will primarily be utilized to offset equity compensation dilution over the next several years.
Express: rev +2%, operating income -66%; Ground +11% operating income flat; Freight up slightly, operating income $4 mln vs. ($1) mln last yr.
The company issued downside guidance for Q4, sees EPS of $1.90-2.10, excluding non-recurring items, vs. $2.13 Capital IQ Consensus Estimate.
The compaby issued downside guidance for FY13, lowers EPS to $6.00-6.20 from $6.20-6.60, excluding non-recurring items, vs. $6.31 Capital IQ Consensus Estimate.
The quarter's results reflect the decline in profitability at FedEx Express due to the accelerating demand shift toward lower-yielding international services and lower international export yields. The quarter's results were also negatively impacted by the business realignment costs noted earlier and by fewer operating days in each transportation segment.
"Our lower-than-expected results for the quarter and reduced full-year earnings outlook were driven by third quarter international revenues declining ~$100 million versus our guidance primarily due to accelerating customer preference for lower-yielding international services, lower rate per pound and weight per shipment. We expect these international revenue trends to continue. We have other actions under way beyond those already included in our profit improvement program. Some of these additional actions may involve temporarily or permanently grounding aircraft, which could result in asset impairment or other charges in future periods. In early February, a number of officers and managing directors, primarily at FedEx Services and FedEx Express, accepted voluntary buyouts, and on February 15, thousands more team members were notified of their eligibility for the buyout program. This program is one of the first steps in a process that will help FedEx Express achieve necessary cost structure reductions and improved efficiency. In addition to continued profit improvements in the base businesses at FedEx Ground and FedEx Freight, our profit improvement programs are targeting annual profitability improvement at FedEx Express of $1.6 billion by the end of fiscal 2016, from the fiscal year 2013 base business. Collectively, these initiatives are expected to increase margins, improve cash flows and increase our competitiveness."
The FedEx board of directors has authorized the repurchase of up to 10 million shares of FedEx Corp. common stock. These shares augment the remaining 188 thousand shares authorized for purchase under existing share repurchase programs. It is expected that the additional share authorization will primarily be utilized to offset equity compensation dilution over the next several years.
